July 1, 1998 - Creating a Global Company: The Birth of the Chrys-o-Benz?

"At companies like Bertelsmann or Daimler-Benz, management is just as American as at IBM or Coca-Cola. There are no German or U.S. companies, only successful ones," observed Thomas Middelhoff, a German manager with Bertelsmann, a German publisher looking to expand into a global corporation beginning with the possible acquisition of the U. S. publisher Random House.

In early May 1998 Daimler-Benz, a producer of expensive world-class sedans, sports cars and sport utility vehicles, announced that it would merge with Chrysler, the third largest automobile manufacturer in the United States. Chrysler, known, among other things, for its rescue from bankruptcy under the leadership of Lee Iacocca, produces a range of cars but has been most successful recently with its mini-vans.

Analysts immediately raised issues of how the new company would operate. Many mergers that begin with good intentions--the Daimler-Chrysler merger did--often sour when the realities of different corporate cultures clash instead of meld. In the case of Daimler-Chrysler, not only is corporate culture an issue but also national culture.

Web Exercise

Track developments in the merger using articles from newspapers and periodicals--some of which can be located through the Internet, for example, in the New York Times archives--along with the Web sites for Daimler-Benz and Chrysler.

1. Mercedes-Benz
   http://www.usa.mercedes-benz.com
   
   
2. Chrysler
   http://www.chryslercorp.com/
   
   

Before gathering data formulate some questions concerning the merger. Possible questions are:

1. What issues are likely to influence the merger of a German and an American company from the perspectives of national and corporate culture?
   
   
2. What features of organizational structure are likely to evolve to create a global corporation?
   
   
3. What leadership style will emerge as the merger progresses?
   
   
4. How will the merged corporation manage employee issues such as compensation, motivation, and training?
   
   
5. Will the Daimler-Chrysler merger create conditions that require other auto makers to expand their global operations through mergers or other actions?
   
   
6. How will Asian automobile companies such as Toyota, Nissan, Kia, and Honda respond to the merger?
   
   
7. How will U.S. automobile companies--General Motors and Ford--respond to the merger?
   
   

Based on the information you gather to answer these or other questions, make some predictions for the next three, six, and nine months. For example,

• Concerning the new corporation's culture, would you predict that:
  1. American corporate culture or German corporate culture will become the dominant corporate culture.
  2. The corporate cultures will remain separate.
  3. The corporate cultures will easily blend into one unique culture.
• Which corporation's model will employee issues such as compensation, sick days, training, and unions, evolve to, or will there be a hybrid model?

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